1. In the formula for Bayes theorem if the w-probability is greater than the zero than the a-probably is less than the b-probability

2. Posted offer markets with at least two sellers will generate prices that remain a little above prices from double auction markets

3. Running the price clock in a dutch auction once will produce higher observed prices compared to running the clock twice

4. If losers pay winners in a sealed bid auction then they will eventually be willing to bid up to 75 percent more than the winning prize

5. With only one seller in a posted offer market prices will tend to move upward toward the monopoly price

6. Adjusting the concentration of sweet versus sour enabled rats to have a large negative income effect for sour water

7. A sales tax on large luxury boats will impact the buyers more than the sellers of these boats causing the buyers to pay more than half the cost of the sales tax

8. If each seller knew all of the sellers unit costs and the buyers knew all of the buyers unit values a buyer or seller would be able to calculate the competitive equilibrium price before an experiment began

9. Suppose your income taxes rise only on incomes over 250,000 annually then you’re after tax income will be unaffected if your annual income is 100,000

Short Essay Questions

1. Recall the loser pay winner auction experiment done in class.

a. Discuss how these experiments explain why the bidder changed their minds toward wanting to bid well above the value of the prize, even though they refused to do so at the beginning

b. Discuss how the experiment explains why George Bush and many citizens changed their minds about a preemptive attack on Iraq.